Nam Cheong

Nam Cheong: Positive momentum continues after grp announced that it has sold three more vessels worth US$56.4m, bringing the number sold this year to a record high. These contract wins bring Nam Cheong's order book to RM1.45b ($577m), underpinning earnings visibility for the next 3 years, and also include a letter of intent for 4 multi-purpose PSV valued at US$130m. DMG add that astute investors would notice that Nam Cheong just pulled off a small miracle – selling 2 AHTS vessels for 1Q13 delivery when all the small AHTS for 2013 have already been sold since Novr this yr. Mgt clarified that the original buyers agreed to take vessels for delivery in 2014 and to give up their current 2013 orders to Icon Offshore. Add that Nam Cheong has already sold 9 out of the 19 vessels scheduled for delivery in FY13F, and with these sales four out of our forecast 20 vessels for FY14F have already been sold. Nam Cheong is keeping up a very strong order momentum. Overall, house maintain BUY with a TP ofS$0.300. With the year essentially closed, house roll valuations over to 8.5x FY13F EPS for a TP of $0.300, which is a very conservative multiple for a company growing at a 28% CAGR for the next three yrs.